Tax credits, investors are suggested solutions to housing shortage

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WORTHINGTON — Solving the housing shortage in southwest Minnesota could be as easy as building more places to live.

Unfortunately, building more places to live isn’t all that easy.

Someone needs to shoulder the cost of new housing developments and lots of someones need to be able to afford rental rates, said the city and county government officials who met with state housing leaders Tuesday. Attendees at the Southwest Minnesota Housing meeting at JBS agreed the shortage has reached problematic, if not crisis levels — but they struggled to find a feasible solution as the rest of the state’s economy slumps.

“Somebody said that the U.S. is holding a recession and southwest Minnesota refused to participate,” said Dan McElroy, commissioner of the Minnesota Department of Employment and Economic Development, referring to the area’s increasing population and 4.10 percent unemployment rate, which is lower than both the state and national averages. “It’s exciting to see something that is the opposite of the problem I usually deal with, which is unemployment,” he said.

But the need for housing in Worthington and neighboring communities remains.

Jenny Andersen-Martinez, human resources director at JBS, cited a summer 2008 housing survey that found “no effective vacancies in the rental marketplace” in Worthington. JBS buses 110 of its employees from Sioux Falls, S.D., and Luverne daily, and estimates 150 housing units are needed immediately for their employees alone.

The company is finalizing plans for construction of a 72-unit housing project, which would provide their employees with first grabs at vacancies. An additional 24-unit townhome project, a joint effort between the city, regional agencies and JBS, is in limbo.

Rick Goodemann, executive director of the Southwest Minnesota Housing Partnership, also spoke of the need for affordable housing in the area.

“We’ve had as many as four families in one house, that’s 38 children combined,” he said, adding the vacancy rate is nonexistent in Worthington, 1.8 percent in Pipestone and 5 percent in Luverne. SWMNHP-owned rental properties in all three cities have waiting lists.

“Affordable housing does not get done without a variety of stakeholders and players,” said Dan Bartholomay, commissioner of the Minnesota Housing Finance Agency, echoing the group’s suggestion that organizations collaborate to fund developments.

Bartholomay listed the MHFA’s current goals: finding new affordable housing, preserving existing affordable housing, ending long-term homelessness and increasing emerging market home ownership rates.

At the conclusion of the meeting, people in attendance brainstormed solutions to the crisis, but stopped short of developing a very concrete plan.

Worthington city councilman Ron Wood cautioned against the exclusive use of tax credits, which can be given to developers of affordable housing.

“We can’t rely just on tax credits to solve this problem that’s two decades old,” agreed Andersen-Martinez. Wood suggested taking advantage of decreased construction costs to build now.

“There are opportunities,” insisted Mayor Alan Oberloh. “It’s just a matter of the economy opening up enough for people to want to (invest in housing projects).”

Glenn Thuringer of Worthington Regional Economic Development Corp. suggested using the RAIN Source, a network of investors, to find funding sources — an option that will be investigated, said Bill Blazar, the senior vice president of the Minnesota Chamber of Commerce who led the discussion.

“The takeaway might be that we need to think creatively about these projects that that need different amounts of money,” Blazar said.

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